Inventory Financing to Enhance Your Cash Flow

Inventory Finance for Better Cash Flow

Meet your business’ needs using Inventory Financing. It is ideal for immediate cash to cover your working capital requirements and cash flow needs.

Inventory financing is a short-term, asset-based loan that is collateralized by the inventory you purchase. You can utilize the collateral to obtain a revolving line of credit. You can also use the collateral to buy additional inventory, provide cash flow during seasonal business variations, or for other purposes.

Inventory financing is useful for businesses that need to carry high levels of inventory – such as wholesalers and retailers. This is especially necessary during busy seasonal periods.

What are the Benefits of Inventory Financing?

To Keep Shelves Stocked

Inventory funding lenders offer working capital to help keep shelves stocked with products demanded by customers. Small and medium-sized retailers and wholesalers with insufficient money may find it hard to maintain adequate inventory. Through inventory financing, these businesses can use the revolving credit line provided by inventory financing to do so.

During Periods of Cash Shortfalls

Inventory financing can add to your funding when your cash flow is lagging, for example, during seasonal lows.

When Bank Funding is Unavailable

You can turn to inventory financing if your business fails to get bank financing. For example, due to bad credit history or you are a young company with limited credit history.

How does Inventory Financing Work?

Inventory often sits on a retailer or wholesaler’s shelves awaiting demand. During such periods, the business’s cash is tied up and not available for other purposes. For many small and medium-sized companies, there is a constant demand for cash flow. Also, these companies can’t afford to tie up their cash in inventory. They need to keep their capital reserves and business lines of credit available for other uses.

Inventory funding allows you to finance inventory shortly after it has been purchased. You get the funding by submitting a drawdown request to your lender, which deposits the funds in your bank account. Once the funds are in your bank account, you can use them for any business expense. Transactions usually settle as inventory is turned into a product and sold off to customers.

Inventory financing company funds the inventory up to 80% of its appraised value. After selling the inventory, the lender remits the balance, less a fee for their services.